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Fake iPhone Report Throws Apple Stock

by , 7:55 AM EDT, May 17th, 2007

Apple stock took a wild ride on Wednesday after what initially appeared to be a legitimate leaked memo claimed that the iPhone would be delayed until October, and Mac OS X 10.5 wouldn't ship until January 2008. Once the memo appeared on Engadget late in the morning, the Mac and iPod maker's stock dropped about three points almost immediately in a trading frenzy.

Apple reacted quickly and issued a statement saying that the iPhone and Leopard are both still on track - the iPhone will ship at the end of June, and Leopard will ship in October. Engadget ran a retraction once it had Apple's real statement, and then the company's stock began to stabilize.

How someone was able to create an internal email that looked legitimate to Apple employees is still unclear, and the company is looking into the incident. Investors, however, are looking for more and want an SEC investigation, according to Business 2.0. Many were dumping their stock and potentially losing money in the process.

TMO forum members offered their own take on the situation. "The FUDmeisters are going to extraordinary lengths, and this was IMO a deliberate attempt to whack the stock," said Tommo_UK. "The SEC want to investigate something? They should go hell-for-leather on this, if Apple don't themselves. Something tells me that His Steveness is not going to be very happy about this and is likely to launch a full-scale investigation of his own."

SNIPUS added "The people who got really nailed are the ones that had conservative stops in. And the ones who profited were the crooks that had buy stops.... I agree there will be an investigation but not by Apple."

Apple's stock never fully recovered on Wednesday and closed down at US$107.34. Apple is currently trading in the pre-market at $107.70, up 0.36 (0.34%).


Jeff Gamet is TMO's Morning Editor and Reviews Editor. He lectures, teaches and speaks on Mac OS X and design-related topics, and is the author of The Designer's Guide to Mac OS X from Peachpit Press.

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Observer Comments

Show: Subjects Only | Full Comments
Close Name:cdhowe Posts: 1 Joined: 17 May 2007
Subject: Followup on the Apple disinformation story

I wrote a follow-up analysis of the role of disinformation in financial markets today, while using Apple and the TMO forums as supporting points. You can read my take on the situation here:

http://www.blackfriarsinc.com/blog/2007/05/apple-bears-brunt-of-wall-street-new

Given that even Jim Cramer has claimed publicly that disinformation is one of the tools in the hedge fund arsenal, I suspect yesterday's email was actually a deliberate stock manipulation attempt by someone wanting to induce some volatility.

Carl

View Name:Guest
Subject: Tommo_UK is a dumbass.
Close Name:Biff Posts: 1479 Joined: 08 Apr 2004
Subject:

Quote
cdhowe wrote:
I wrote a follow-up analysis of the role of disinformation in financial markets today, while using Apple and the TMO forums as supporting points. You can read my take on the situation here:

...

Given that even Jim Cramer has claimed publicly that disinformation is one of the tools in the hedge fund arsenal, I suspect yesterday's email was actually a deliberate stock manipulation attempt by someone wanting to induce some volatility.

Carl
LOL. EVEN Jim Cramer?! I'm not sure if just repeating what others say actually constitutes an analysis. But it sounds like you've managed to come to the same conclusion as the rest of the free world, so kudos to you! Keep mentioning Cramer though and I bet you'll get that big analyst job offer before you know it!

View Name:Guest
Subject: Trading on Insider Information?
Close Name:gslusher Posts: 2048 Joined: 13 Nov 2002
Subject: Re: Trading on Insider Information?

Quote
Anonymous wrote:
Umm... the email was reportedly an *internal* memo, right? Wouldn't the SEC violations be on the part of the traders who acted on what they *believed* was insider information? Isn't that evidence of intent?

Just wondering....


I'm not an attorney, but, it would seem that, once the fake email was published to the world by endgadget, it was no longer "insider information." Insider information, as I understand it, is information to which other people do not have access.

It's possible that someone deliberately planted the fake email to manipulate the stock price. It's also possible that it was a malicious hack. Unfortunately, the SEC has relatively few investigators to look into any shenanigans. This may be an exception because of the money involved. As "Deep Throat" told Bob Woodward, "Follow the money."

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